by Amanda Rohrer
Anecdote and evidence don’t always seem to agree when it comes to the unemployment rate and the economy. Although Minnesota’s unemployment rate has been declining consistently for the past two years, most people still have stories about friends, family, and neighbors who just can’t get a break. All the published unemployment rate tells us is the percentage of the adult population actively seeking employment. There are two major areas it’s not designed to cover. First, it doesn’t count potential workers who aren’t active in their job search efforts. Second, it doesn’t count people who are working, but could be working more or in more demanding or better paid jobs — the underemployed.
People who are counted among the “employed” are those who are working for pay or profit. This means that the self-employed consultant who hasn’t had enough contracts to fill her time in months is employed. The high school student who mows neighbors’ lawns for spending money is employed. The graduate school-educated barista at the local coffee shop is employed. Whether workers can meet their financial obligations is not part of the unemployment rate nor is their level of qualification for the jobs they hold.
Included among the employed are people working “part-time for economic reasons.” Economic reasons simply means that the person would prefer a full-time job but can’t find one. Sometimes a worker is hired for full-time work, but rarely gets more than 30 hours per week; this person is also working part-time for economic reasons. The number of people in this category has grown significantly during the recession. In the 12 months ending in September 2012 (the most recent period available) 116,900 Minnesotans—or approximately 3.9 percent of the state’s labor force—worked part-time for economic reasons.
Who’s Working Part-Time for Economic Reasons?
The increase in workers employed part-time for economic reasons corresponds with increases in the length of unemployment. This suggests that while jobs were scarce, workers took what they could get. Whether that was accepting part-time employment, or not leaving a job that was a poor fit, some of the impact of the recession on the unemployment rate was masked by underemployment.
The number of part-time unemployed people is interesting in and of itself, but it also serves as an indicator of other economic stresses. Since part-time work is often common in retail jobs, this could reflect a growing share of qualified people working in jobs that have lower skill requirements. It could also be an indicator of the degree to which families’ financial reserves have been tapped. In either case, it’s worth understanding that the improvements in unemployment rate don’t necessarily indicate a return to normalcy.
Read the full article on the characteristics of people working part-time for economic reasons in Minnesota, which appeared in the October 2012 issue of Minnesota Employment Review.